boomer

I just got a "Payment of Account" letter from the taxman asking for around GBP350 by the 31-Jan-2002 for money owed from the 00/01 tax year.

I reckon that this is because i have recently been made redundant, so they can't deduct all the money owed from last year via my tax code 'cos i simply ain't earning enough at the moment.

However, when i got my final pay-slip, i think that i paid far too much tax due to "the way the system works". Indeed, when i do the calculations for earning and tax for (so far) this year, i have currently paid 42% tax - THAT IS ON EVERYTHING, not just the high rate bit.

So i am in the ridiculous situation that the taxman wants me to pay him a few hundred quid for last year, even though i have already well overpaid for this year. Also, he probably is still assuming that i have a company car, so i could be even worse off.

I called the tax office, and the girl said that i should wait until April next year then fill in a return and they will calculate what is (may be) owed to me.

Thus i lose out on six months interest on a few thousand pounds

Is this the way things really work???

mb

Phil

Tax Man will pay you interest if you have overpaid!

I personally find a VISIT not a TELEPHONE CALL often resolves these queries

Phil

templar

without actual figures it's difficult to say for certain but:
if the tax payable on 31st January 2002 is quoted as 'balancing payment for 2000/2001', there is no way to avoid having to pay, unless, you start work again before that date, and the unpaid tax is coded into your tax code. not paying will result in interest charges, and failure to pay by 28th February will result in 5% surcharge.

if you don't expect to work or have any other form of income prior to 5th april 2002, you may be able to reclaim the overpaid tax for 2001/02 prior to the end of the tax year. it depends on your individual circumstances.

you should be able to find a decent tax advisor who could sort this out for you for about £50, assuming your tax affairs are fairly simple. however, since all tax returns have to be in by 31st january, i doubt that anyone could fit you in before then.

hope this helps

roj

boomer

Phil,

if i get interest on the money overpaid, then i am not so worried - so long as it is at least the same as i would NET in a decent savings account.

roj,

yes, it is indeed a "balancing payment", and i have no problems (financially or in principle) paying it. It just seems daft that they probably owe me money, but due to the way the system works - i have to wait six months for my dosh

BTW, i feel privileged that your first ever post on Scoobynet was to help me with my tax query - thanks (or maybe you are a regular who doesn't want to admit who he works for )

Cheers,

mb

templar

mb

current official inland revenue interest rate on (genuinely) overpaid tax is 6.25% p.a. which is not taxable i.e. received gross, and no further tax to pay.

p.s. i hate to admit it, but i'm a chartered accountant.

roj

boomer

Oooo-er,

6.25% - thats even better than an ISA!!!

I've pulled a load of PDFs down from the IR web-site, so i'll have a good read.

Cheers,

mb

p.s. do chartered accountants drive Scoobies?

Bas

roj

I think you'll find that 6.25% is the rate charged for underpaid tax...I haven't got the figures to hand but the rate for overpaid tax is closer to 3%! (The taxman isn't that generous!)

Bas (and yes I'm an accountant too...and I drive a Scoob)

templar

doh!!

you're absolutley right, i read the wrong line on my tax tables. the actual rate is dead on 3%.

btw, with the base rates where they are at the moment, my own cash isa doesn't give me much more than this anyway.

roj

carl

The building societies give about 1-1.5% at the moment. Far better to overpay the taxman